The board of directors of Mercantile Bank Limited (MBL) has decided to issue Perpetual Bond up to Tk 7.0 billion, said an official disclosure on Thursday.
The bank will issue the bond for raising funds as part of the additional Tier-I (AT-1) capital to support Bank’s Basel III compliance in line with Bangladesh Bank guidelines on risk based capital adequacy dated December 2014, according to the disclosure.
The bond issue, however, subject to approval from concerned regulatory authorities – Bangladesh Bank and Bangladesh Securities and Exchange Commission and complying with regular requirements, said the disclosure.
The MBL has also informed that the board of directors has decided to sponsor an open-end mutual fund in the name of “Mercantile Bank Unit Fund” to the tune of Tk 500 million.
Of the total size of the fund, the sponsor will contribute 10 per cent or Tk 50 million and the remaining Tk 450 million will be raised from market through selling its units.
MBL Asset Management Ltd shall be appointed as Fund Manager of the said fund subject to approval from stock market regulator.
Mutual funds are investment funds that gather a fixed pool of money from several investors and re-invest them into stocks, bonds and other securities and then distribute the profits among the unit holders.
Open-end mutual funds have no timeframe to mature and are not listed with the bourses.
Each share of the Mercantile Bank, which was listed on the Dhaka bourse in 2004, closed at Tk 12.40 on Wednesday.
Its shares traded between Tk 10 and Tk 14.90 each in the last year.
The bank disbursed 11 per cent cash and 5.0 per cent stock dividend for the year ended on December 31, 2019.
The bank’s paid-up capital is Tk 9.84 billion and authorised capital is Tk 12 billion while total number of securities is 984.01 million.
The sponsor-directors own 39.37 per cent stake in the company, while the institutional investors own 18.52 per cent, foreign investors 4.85 per cent and the general public 37.26 per cent as on September 30, 2020, the DSE data show.